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NORTHWEST TERRITORIES
Excitement is growing in Norman Wells and Tulita as oil and gas companies begin work on the multi-million dollar land parcels purchased from the GNWT this summer.

Husky Energy Inc., whose 2006 drilling and testing program in the Sahtu Summit Creek region is pictured, is now beginning a new oil exploration program in the Sahtu region, after winning two $188 million land parcel bids between Tulita and Norman Wells this past summer. - photo courtesy of Husky Energy Inc.

Husky Energy Inc., which won bids on two parcels between Norman Wells and Tulita for a total work commitment of $376 million, is currently setting the stage for a 2011-12 winter drilling program. Barges full of drill rig components, bulldozers, dump trucks, graders, backhoes and cold-weather worker habitats are already arriving to fulfil equipment requirements.

"They have put some smiles on people's faces in Norman Wells and Tulita," Sahtu MLA Norman Yakeleya said. "The people are excited because they're going to work. They're excited because they're going to make money for the company. The families are happy because mom and dad's going to work," he said, estimating a 3D seismic program scheduled to begin before the end of the year and the planned construction of two vertical exploratory wells will require upwards of 100 local workers.

Husky Energy's proposed Slater River drilling and 220-square-kilometre seismic program, taking place about 55 km southwest of Norman Wells, will involve the preparation of 40 km of winter access roads and the construction of an ice bridge across the Mackenzie River.

"These companies want to come in and work in the Sahtu because they believe that the mother-load is yet to be found," Yakeleya said, referring to glowing geologist reports of crude oil deposits within the Canol and Hare Indian underground formations in the region.

In May 2006, Husky Energy announced it had made a hydrocarbon discovery at one of two wells drilled on another lease, in the same Central Mackenzie Valley area. The well was drilled to a depth of 3,147 metres, and natural gas flowed to the surface on open-hole testing at a total rate of 5 million cubic feet per day, the company reported.

Husky Energy spokesperson Graham White declined to speculate on the hydrocarbon potential of the area, noting that "the purpose of the wells and the 3D seismic program, is to learn of the underlying geology and produce high-quality core samples for evaluation."

Pending the sample evaluation, White also declined to speculate on the types of extraction methods that may be required, as reports emerge of fracturing, or "fracking" being proposed by MGM Energy Corp., which won bids for three exploration licences in the Central Mackenzie Valley and committed to spend $5 million along with a private partner company on exploration over the next four years.

"If you need to fracture, we believe we could demonstrate that that could be done without any environmental damage whatsoever," MGM Energy president Henry Sykes said. "I wouldn't rule it out but it will be up to the regulators and the communities.

"It does not pose environmental risks," Sykes said about the controversial extraction method. "We believe that there is no risk to the land, to the water, and no risk to underground formations. I think we could prove that scientifically."

Yakeleya said he has heard reports of the different extraction strategies that may be used, and admitted the communities still need more education on the different processes.

"I don't know enough of it to give an educated opinion right now," he said. "I need to sit down with my people in the Sahtu and they need to really understand what fracking is all about; what are the impacts and the effects and why some countries have banned it."

MGM Energy does not have plans to begin drilling this winter, but has started consultations in the region for a proposed winter program next year.

Husky Energy has already struck Access and Benefits agreements establishing the terms for proceeding with exploration and development activity with several stakeholders in the Central Mackenzie Valley region, including First Nations and Metis land corporations.

"The days of coming in and giving us beads and trinkets and pots and pans are over," Yakeleya said, noting the people of Tulita and Norman Wells will see benefits of the oil and gas activity that has started in the region.

"It's going to be busy. A lot of people are going to be working and there's going to be a lot of dollars spent."

Shares of Calgary, Alta.-based Husky Energy closed at C$24.53 Thursday on the Toronto Stock Exchange.

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